Glossaries

(De jure or de facto) acts either necessitated by the company's daily needs or which, due to their urgent nature and minor importance, do not require the authorisation of the board of directors. The concept of daily management varies from one company to another.

A company may opt for either equity or debt financing. For accounting purposes, debt is recorded based on its maturity: short-term loans (such as a bank credit line), short- or long-term debt instruments (bonds, notes, etc.), and off-balance-sheet financing (such as leasing arrangements).

Ownership and control of a company depend on the percentage of shares held by a shareholder. Dilution occurs when new shares are issued further to a capital increase. This usually happens when additional financing is required while debt ratios must remain stable (for instance, the company no longer has sufficient liquidity, a new research or development phase is started, etc.). Additional funds may be raised either on- or off-exchange. Dilution may also occur when employees/management exercise their options or warrants (to acquire existing or new shares) or when the holders of convertible debt instruments exercise their rights and acquire shares of the company.

When a company sells its own or its parent company's shares to its directors, employees and/or consultants at a discount, a taxable benefit arises, assessed at the fair market value of the share less the price paid. A circular issued by the Belgian tax administration on 21 June 1995 provides for an exemption if: (i) the shares are issued in whole or in part to the company's employees further to a capital increase (pursuant to Article 609 of the Company Code); (ii) the discount is no more than 20% of the normal issue price; (iii) the company distributed at least two dividends during the three last financial years; (iv) the shares have voting rights; (v) total capital increases in the current financial year and the four preceding financial years do not exceed 20% of the company's capital; and (vi) the shares are in registered form and non-transferable for five years (except under certain circumstances, such as termination of the employment contract, retirement, or death or disability of the beneficiary or his or her spouse).

Shareholder agreements or articles of association often contain drag-along provisions in favour of majority shareholders. A drag-along right allows a majority shareholder or group of shareholders to force a minority shareholder to join the transaction at the same conditions without, for instance, jeopardising the sale of the company (e.g., if the board is in favour of selling, all shareholders are obliged to vote in favour).